The buzz around the new year always seems to be about tax returns. How much money are we getting back from the government? "I hope I don't have to pay in." Everyone is so anxious to receive there return and go buy a new toy.

The way we think of tax returns needs to change.Very rarely is this money used to pay down debt or go towards bills and if it is, great however this is not free money! This is extra money you payed to the Government that they earned interest on and now returning it to you without the interest. You just lost valuable interest and helped the Government make money from YOU.

Your goal with tax returns is to compile the right amount of money being taken out of your check so at the end of the year you receive a very little tax return(consult your tax adviser about exemptions). The idea behind this is simple. The larger your tax return means the more money you had lent to the Government (free of charge). After speaking to your tax consultant and configuring the needed amount to withhold, you could have kept this money throughout the year and not have given it to the Government. This would result in larger take home pay checks allowing you to save more and gain interest on your money.

  • Larger tax returns = smaller pay checks for you - You giving the Government FREE money for a year.
  • Smaller tax returns = Larger take home checks - Money saved throughout the year to save, pay bills or pay down debt.
Please look over your W-4 and speak to your tax adviser to calculate the right numbers to save you more money each year. Use this tip and also include the new stimulus package released that ads roughly 13$ to your weekly pay check you will have saved another couple hundred dollars this year!

0 comments

Post a Comment

Your Frugal comment!